The world’s most important workers threaten to hit the economy where it hurts

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By Augusta Saraiva and Bryce Baschuk

07/24/2022 (Bloomberg) — The pandemic has taken an unprecedented toll on global supply chains — and on the workers who have kept those systems running in difficult conditions. It looks like many of them have had enough.

A wave of strikes and other labor protests is threatening industries around the world, particularly those that move goods, people and energy. From railroad and dock workers in the US to natural gas fields in Australia and truck drivers in Peru, workers are demanding better conditions as inflation eats away at their wages.

Precisely because their work is so critical to the global economy right now – with supply chains still fragile and labor markets tight – these workers have leverage at the negotiating table. Disruptions caused by labor disputes could contribute to shortages and rising prices that threaten to trigger recessions.

According to Katy Fox-Hodess, a lecturer in industrial relations at Sheffield University Management School in the UK, this is encouraging workers in transport and logistics – which include everything from warehousing to trucking companies – to hold their own against their bosses. She points to the already harsh working conditions in the industry after years of deregulation.

Workers bear the brunt

“Global supply chains weren’t designed to deal with a crisis like the pandemic, and employers have really dumped this crisis on workers,” says Fox-Hodess.

For their part, central bankers worry that workers are being overpaid, triggering a wage-price spiral similar to the one that fueled inflation in the 1970s. In fact, there is not much evidence of this, as wage increases generally lag behind prices, partly because organized labor is by and large less powerful than it was then.

But that may mask another problem. Much of today’s inflation stems from specific shortages – and labor unrest in these key industries could have a wider impact on prices. For example, a threatened strike by Norwegian energy workers earlier this month unleashed new tremors on European natural gas markets.

There is also a risk of rebalancing economies. In the pandemic, people bought more goods at the expense of services like plane tickets or hotel rooms, straining supply chains and fueling inflation. Consumption habits are expected to return to normal and consumers will be happy to travel again. But strikes by cabin crew at Ryanair Holdings Plc or airport workers in Paris and London are adding to the travel turmoil that could scare off potential tourists.

Here is a summary of some of the hotspots of labor unrest rocking the global economy.

Trains and trucks…

In the US, where a long-slow labor movement is showing signs of awakening, as unions at companies like Starbucks Corp. and Amazon.com Inc. gain a foothold, some of the biggest disputes in the transportation industry take place. A rail strike is threatening the country’s already ailing supply chains, which could paralyze the movement of goods.

Also Read: California Truckers in Gig-Work Legal Limbo, Risking Supply Chains

After two years of unsuccessful negotiations with the country’s biggest railroads, President Joe Biden this month created a panel to resolve a deep rift between 115,000 workers and their employers. The Presidential Emergency Board must come up with a mutually acceptable contract plan by mid-August.

“There’s a very tight job market, which puts workers in a position where they both have a lot of grievances and feel empowered,” said Eli Friedman, associate professor at Cornell University. The school tracked 260 strikes and five lockouts in the US involving about 140,000 employees in 2021, resulting in about 3.27 million strike days.

In the UK, train drivers say they will go on strike on July 30 and two other transport unions are also planning 24-hour walkouts next week. Not only passengers will suffer: AP Moller-Maersk A/S, the world’s second largest container shipping company, warned that these measures would “significantly disrupt” freight traffic.

Canada has also seen strikes on its railroads — part of the largest spate of industrial action in the country in decades. Tens of thousands of construction workers also quit their jobs this summer. In May, 1.1 million workdays were lost to work stoppages, the highest monthly total since November 1997.

In many countries, truck drivers protesting high fuel costs have been at the forefront of labor unrest. Truckers in Peru are staging a nationwide strike this month. In Argentina, roadblocks by drivers lasted a week in June, delaying about 350,000 tons of harvest – about 10 small shiploads. In South Africa, motorists blocked roads, including a key trade link with neighboring Mozambique, in a demonstration against record pump prices.

…and ports and ships

The industrial dispute that worries US economic watchers most is the one involving more than 22,000 West Coast dock workers. Her contract expired in early July and the International Longshore and Warehouse Union is negotiating a new one. Both sides say they want to avoid disruptions that could shut down ports that handle nearly half of America’s imports.

Meanwhile, the Port of Oakland, California’s third-biggest, was forced to close some of its gates and terminals last week – increasing the wait for imported goods – because truckers blocked access in protest of a gig-work law that could accommodate 70,000 driver off the road.

German ports have been squeezed after a two-day strike earlier this month, which has exacerbated freight shortages that are affecting shipping and hurting Europe’s biggest economy.

In South Korea, the shipbuilding industry has seen a surge in orders amid the supply chain crisis. Workers have been protesting at a Daewoo Shipbuilding & Marine Engineering Co. dock in the southern city of Geoje for several weeks, demanding a 30% wage increase and a relief from their workload. The action has already delayed the production and launch of three ships, and President Yoon Suk Yeol urged ministers to find a solution. A solution seemed close this weekend.

Air Travel Chaos

Labor disputes have contributed to Europe’s summer travel chaos as airlines and rail companies were already suffering from staff shortages in job markets in the wake of the pandemic. Flight schedules of airlines including Ryanair, EasyJet Plc and Scandinavia’s SAS have been disrupted by strikes.

A strike at Charles de Gaulle airport outside Paris forced flights to be canceled and London’s Heathrow faced a similar fate, before the Unite Union canceled a planned strike on Thursday and said it had received a “sustainably improved offer” for pay rises.

Even in normally laid-back Jamaica, air traffic controllers staged a day-long strike on May 12 to complain about low wages and long hours, the closure of Jamaican airspace and disruption to travel for more than 10,000 people on the Caribbean island. At least one aircraft had to return to Canada during the trip.

energy crunch

A strike by oil workers in Norway threatened another blow to Europe’s energy supply, already hit by the war in Ukraine with reduced gas supplies from Russia. The dispute was settled when the government stepped in and proposed a mandatory wage committee. The country’s labor minister said she had no choice but to intervene as the potential had “far-reaching societal implications across Europe”. A further escalation of the strike could have shut down more than half of Norway’s gas exports.

In Australia, one of the world’s largest exporters of liquefied natural gas, workers at Shell Plc’s Prelude floating LNG production facility in Western Australia have extended industrial action until August 4, according to the Offshore Alliance union. The disruption halted loading at an export facility and exacerbated the world’s fuel shortage.

Workers’ groups of the South African state-owned energy company Eskom Holdings SOC Ltd. achieved a pay rise that roughly keeps pace with inflation — and was illegal under laws that prohibit Eskom workers from going on strike over the provision of electricity, which is considered an essential service, after a week-long strike that exacerbated the country’s power outages

–Assisted by Josh Eidelson, Lin Zhu, Jim Wyss, Michael McDonald, Jonathan Gilbert, Theophilos Argitis, Zeinab Diouf, Gem Atkinson and Ana Monteiro.

© 2022 Bloomberg LP

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